MOUNTAIN VIEW, CALIF.--Google shareholders rejected a proposal on Thursday to require the search giant to set policies to protect freedom of access to the Internet and not self-censor.
Google "must make special efforts to avoid being seen as complicit in human rights abuses...and not be proactive in censorship," said Patrick Doherty, a representative of the New York City Pension Fund, which submitted the resolution. When it created its Web search site for China, Google said it would remove results from its www.google.cn Web site that would likely offend the Chinese government. Yahoo shareholders face several similar resolutions at their annual meeting.
Before the shareholder vote, Google chief legal counsel David Drummond said the board opposed the measure because it would do more harm than good.
"We appreciate the spirit of this proposal, he said. "However we oppose the proposal because we don't think that at the end of the day it advances the causes of free expression and access to information...Pulling out of China, shutting down google.cn is, to us, not the right thing to do at this point and is not the answer to the Internet censorship problem."
In a meeting with reporters before the shareholder meeting, Google Chief Executive Eric Schmidt defended the company's practices.
"Without in any way defending their laws and policies, the censored or omitted data comprises less than 1 percent of the answers...the index is better, more relevant," he said. "We believe that as a result, the Chinese citizen has more information and more choices than they would had we not been in the country."
Schmidt serves as a member of the board at Apple, whose shareholder meeting was earlier in the day and where stock options backdating was a main topic of discussion.
Meanwhile, Schmidt gave an indication of how the company is transitioning from being a search and advertising company to being a provider of Web applications for things like e-mail, calendar and productivity applications like documents, spreadsheets and presentation software.
"We're going to start using the phrase 'search, ads and apps' to define what we're trying to do," he said. "There is a big opportunity before us which is to move to a new architectural platform...based on the data in the cloud."
Google is seen as targeting Microsoft's core desktop business by offering free versions of software online that Microsoft sells for use on desktops. Google has denied that charge. Regardless, its moves have prompted Microsoft to boost its Web services but the efforts have not paid off.
'Criticism is healthy'
During a question-and-answer session, a shareholder asked what Google's response would be to the criticism that it is becoming the next Microsoft in the sense of being perceived as a disliked dominant player in the industry. "We make decisions based on our users," said Schmidt. "We have made a commitment to not trap user data."
The topic was broached during the meeting with reporters, with Schmidt saying he had been surprised at the virulence of some of the criticism over the years of Google. "I think in our position we are going to be criticized and that criticism is healthy...I think it makes us stronger," he said. It's part of where we are. I've been in other spots and I'll take this spot."
Google co-founder Larry Page said the company's practices, such as its use of open-source software that can be freely modified and used as opposed to proprietary software such as that from Microsoft, was a testament to its integrity.
As Google gets bigger and more successful "it's natural for people to think those things," he said. "We encourage people to give high revenue share to our partners when we're running our ads on other peoples' sites...I'm pretty comfortable about it having come from a kind of academic background and really grown up on open source. I think we can do a lot to improve the state of the world in very positive ways."
Schmidt said that his biggest worry is scaling the business and growing without losing the benefits of having a consensus-driven, "creative, collaborative culture." He listed mobile and local search as the areas for the biggest growth opportunity from a product standpoint.
With regard to the proposal to purchase online ad company DoubleClick for $3.1 billion, the company filed its application for regulatory approval with the U.S. government last week and should hear back within three weeks, giving it an idea of how long it will take to finalize the deal, said Google general counsel Kent Walker. The company had not yet filed any paperwork on the deal in Europe, he said.
Meanwhile, Google is testing a set of tools it calls "Claim Your Content" with a few content providers that is designed to automate the process of discovering and seeking a takedown of copyright-protected content that has been uploaded to YouTube, Schmidt said. "That is ultimately the answer to the complaints," he said. "We're also trialing various advertising formats and monetization models." The company has been sued by Viacom over clips of its programming that people post to the site.
"We are their best hope to monetize that content online," said Page. "We are the logical partner to enable monetization and distribution."
Sergey Brin, who co-founded the company with Page while they were graduate students at Stanford, was out of town and did not attend the meeting with reporters or the shareholder meeting.
Asked about how the roles of the troika have evolved over the years, Schmidt said: "We're the same three clowns, let me tell you," he said. "In the division of labor, Sergey is still focused on deals and cultural aspects...Larry is interested in the physical plant, the building strategies."
Looking forward, Schmidt predicted that "someone will found the next Google. These things have cycles...There's always another set of young entrepreneurs. Maybe they will be at Berkeley, right Larry?"
"I doubt it," Page said.